Mandelbaum Barrett PC secured a legal victory after the U.S. Bankruptcy Court for the District of New Jersey dismissed an unauthorized Chapter 11 bankruptcy filing involving Ashley Stewart, a national plus-size fashion retailer.
The firm’s bankruptcy and creditors’ rights team successfully represented the authorized board of directors of Ashley Stewart in a matter arising from an improper bankruptcy filing by former board members. The attempted Chapter 11 filing was made without proper corporate authority and in direct violation of a New Jersey Superior Court Consent Order.
Attorneys from multiple Mandelbaum Barrett practice groups acted swiftly to minimize disruption caused by the unauthorized filing. Bankruptcy partner Vincent Roldan presented the bankruptcy court with a clear and comprehensive description of the company’s corporate governance structure, along with the extensive and ongoing state court litigation concerning board authority and the consent order signed by the state court that provides for the voting of the majority shares of Ashley Stewart, which was ignored by the former board members. Within one week of the filing, the court dismissed the Chapter 11 case in its entirety.
“This ruling reinforces a fundamental principle of bankruptcy law that a company cannot seek Chapter 11 protection without proper corporate authorization,” Jeffrey M. Rosenthal, partner and chair of Mandelbaum Barrett PC’s bankruptcy and creditors’ rights practice group, said.
Roldan added, “The court’s swift dismissal sends a strong message that the bankruptcy process cannot be used to circumvent established corporate governance or state court orders.”
The matter was led by partners Jeffrey M. Rosenthal and Vincent J. Roldan, and associate Katie F. Warren, with critical support from Andrew Gimigliano and Michael Giordano of the firm’s litigation and corporate governance teams.
